The eurozone economy unexpectedly swung into contraction in the first quarter after a sharp downward revision to Irish data, while employment in the single-currency area grew for a 20th quarter in a row, data showed Friday.
The euro area's gross domestic product edged down 0.2% in the first quarter, Eurostat's third estimate showed, against the 0.1% uptick in the second estimate and the prior three-month period's 0.2% gain. On an annual basis, the economy expanded 0.3%, down from the previous quarter's growth rate of 1.2% and the second estimate of a 0.8% increase.
Reflecting how Ireland's large multinational sector impacts regional data, the eurozone's decline was primarily attributed to a steep downward adjustment to Irish GDP, which fell 12.1%, compared with the previously measured 2% drop.
France's first-quarter GDP was also recently revised to a 0.1% contraction from an earlier estimate of zero growth. On the flip side, Italy saw its GDP growth tick up to 0.3% from the preliminary reading of 0.2%.
"Excluding the effect of Irish GDP, Eurozone growth remains remarkably steady at around 0.2% per quarter," Oxford Economics said in a note. "But the Q1 reading was flattered by inventory frontloading ahead of impending supply disruption and higher prices. We think this effect will reverse in Q2."
On the labor front, final data from Eurostat confirmed that euro area employment inched up 0.1% in the first quarter, in line with the flash estimate but slowing slightly from the previous three-month period's 0.2% rise. Year-over-year, employment growth moderated to 0.5% from the prior quarter's 0.7%, also matching initial projections.
